Working Paper No. 1279

The Rise and Decline of Private Foundations as Controlling Owners of Swedish Listed Firms: The Role of Tax Incentives

Published: May 20, 2019Pages: 30Keywords: Corporate governance; Entrepreneurship; Family firms; Foundations; Owner-level taxationJEL-codes: H20; K34; L26; N44

The Rise and Decline of Private Foundations as Controlling Owners of Swedish Listed Firms: The Role of Tax Incentives Magnus Henrekson, Dan Johansson and Mikael Stenkula


Private foundations became a vehicle for the corporate control of large listed firms in Sweden during the post-war era, but in the 1990s, they were replaced by wealthy individuals who either directly own controlling blocks or who own them through holding companies. We study potential explanations for this change and pro­pose two taxation-related candidates: shifts in the relative effective taxation across owner types and the dismantling of the inheritance taxation that prevented the genera­tional transfer of the ownership of large controlling blocks.

Our analysis exploits newly computed marginal effective capital income tax rates across capital owners, accounting for all relevant factors, including rules governing tax exemptions. We show that the 1990–91 tax reform, abolition of the wealth tax for controlling owners in 1997, 2003 tax exemption of dividends and capital gains on listed stock for holding companies with a voting or equity share of at least 10 percent, and abolition of the inheritance and gift taxes in 2004 reversed the rules of the game.

Recently, control has largely been wielded through direct ownership, and the role of foundations is rapidly declining. These find­ings point to the importance of tax incentives for the use of foundations as the control vehicles of listed firms.

Magnus Henrekson

Contact

Ph: +46 (0)8 665 4502
magnus.henrekson@ifn.se

Mikael Stenkula

Contact

Ph: +46 8 665 4530
Mob: +46 73 844 18 78
mikael.stenkula@ifn.se

Integrating Immigrants into the Nordic Labour Markets

An Overall Perspective

Pages-from-2019-Calmfors-Gassen---Integrating-Immigrants-into-the-Nordic-Labour-Markets.gif

Denmark, Finland, Norway and Sweden face similar problems of integrating large groups of immigrants, especially low-educated ones from outside the EU, into their labour markets. In this volume, edited by Lars Calmfors, IFN, and Nora Sánchez Gassen in cooperation with researchers from across the Nordic Region analyse how labour market integration of immigrants can be promoted. 

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